Prediction of the Duration of A-Shares Volatility Trend and Analysis of China's Central Bank Policy Balance Strategy

Based on current market data and macro-environment analysis, I will provide a detailed analysis of the duration of the A-shares volatility trend and China’s central bank’s policy balance strategy.

The Fed did implement an interest rate cut in December and started expanding its balance sheet, but long-term U.S. Treasury yields are still rising, which reflects the structural contradiction in global liquidity [1]. Data analysis shows:

• U.S. Treasury ETF (TLT) has a 20-day return of -1.15%
  ，indicating that bond prices have fallen and yields have risen
• Hang Seng Index RSI is only 37.27
  ，in the relatively oversold range, showing cautious market sentiment
• The price correlation between the Hang Seng Index and the U.S. Treasury ETF is 0.115, which is weak but positive, indicating that their trends are relatively independent at present

From the perspective of technical indicators:

1. Hang Seng Index volatility is as high as 270.13
   ，indicating that the market is in a high volatility state
2. RSI indicator is 37.27
   ，close to the oversold area, with potential for a rebound
3. The 20-day moving average is basically flat, and the 60-day moving average forms a suppression, which is a typical consolidation pattern

Based on the current liquidity contradiction and policy cycle,

1. Uncertainty in Fed policies
   : Although interest rates have been cut, there are differences in market views on the policy direction in 2026 [1]
2. Lag in liquidity transmission
   : It takes 3-6 months for the liquidity released by the Fed to be effectively transmitted to emerging markets
3. China’s economic structure adjustment period
   : It takes time to destock real estate and resolve local government debt [2]

According to the latest policy signals, China’s central bank has adopted the following balance strategies:

• Maintain the “basic stability” framework of the RMB exchange rate and allow moderate appreciation [2]
• Regulate through the daily central parity rate to curb rapid exchange rate fluctuations
• Successfully withstood the test of exchange rate stability in the early stage and is now in a relatively favorable period

The Central Economic Work Conference clearly stated that it will use multiple policy tools such as RRR cuts and interest rate cuts in a “flexible and efficient” manner [2]:

• Monetary policy
  : Maintain ample liquidity but avoid over-stimulation
• Fiscal policy
  : Maintain the necessary deficit ratio and debt scale; the budget deficit ratio is expected to remain around 4%
• Structural tools
  : Focus on supporting real estate destocking and local government debt resolution

• Take advantage of the window where the US dollar may enter a long-term weak period and allow moderate appreciation of the RMB [2]
• Reduce import costs through RMB appreciation, increase residents’ purchasing power, and stimulate domestic demand

• Promote the transfer of capital and labor to domestic market-oriented industries
• Reduce trade surplus and lower the risk of global trade disputes [2]
• Increase infrastructure investment to fill the gap caused by the weakening effect of consumption subsidies [2]

As suggested in the original analysis, the year-end volatility is indeed a good time to buy Hong Kong stocks at a low price:

• Hang Seng Index RSI is in the oversold range, with a basis for rebound
• Hong Kong stocks are more sensitive to changes in overseas liquidity than A-shares
• Valuations are at a relatively low historical level

• Industries benefiting from RMB appreciation
  : Imported consumption, aviation, tourism
• Policy-supported sectors
  : New energy, high-end manufacturing, digital economy
• Defensive allocation
  : Public utilities, consumer staples

• Pay attention to changes in Fed policy statements, especially new guidelines after the December meeting
• Closely track China’s real estate sales data and the progress of local government debt resolution
• Watch for adjustments in the new U.S. government’s trade policy towards China

The current A-shares volatility trend is a normal phenomenon during the liquidity contradiction and policy adjustment period, and it is expected to continue until the first quarter of 2026. China’s central bank is effectively balancing the dual goals of exchange rate stability and economic stimulus through gradual exchange rate management and a flexible combination of policy tools. Investors should be patient, seize structural opportunities amid volatility, and pay special attention to the allocation value of the Hong Kong stock market.

[0] 金灵API数据
[1] Yahoo财经 - “Fed降息在即！美國債市持續緊繃 徘徊歷史高點的美股還有聖誕老人行情嗎？” (https://hk.finance.yahoo.com/news/fed降息在即-美國債市持續緊繃-徘徊歷史高點的美股還有聖誕老人行情嗎-090003892.html)
[2] Yahoo财经 - “中央經濟工作會議確立優先事項 決策層發出適度刺激信號” (https://hk.finance.yahoo.com/news/中央經濟工作會議確立優先事項-決策層承諾採取支持性貨幣和財政政策-104909324.html)